FleetCor Acquires STP

FleetCor announced on March 15th that it has signed a definitive agreement to acquire Serviços e Tecnologia de Pagamentos S.A., from a shareholder group including concessionaires CCR S.A. and Arteris S.A., Raizen Combustiveis S.A. (a joint venture between Shell and Cosan), and others, for approximately $1.05 billion USD. STP, which operates under the brand Sem Parar, is Brazil’s leading electronic toll payments company, with near universal acceptance nationally. Using RFID technology, STP-issued tags and stickers process approximately $2.5 billion USD in toll, parking, and fuel payments annually for over 4.5 million active users. STP also provides cardless fuel payments at an expanding number of Shell sites throughout Brazil.

The company has approximately 2,200 employees and is headquartered in Sao Paulo, Brazil. “We have followed STP’s growth and development for many years and are excited today to announce this transaction,” said Ron Clarke, chairman and chief executive officer of FleetCor Technologies, Inc. “We believe that the acquisition will result in substantial synergies as we implement our operating disciplines and consolidate with our other Brazil lines of business.”

The transaction price is denominated in Reals and is stated in the agreement at R$4.086 billion BRL, which is subject to adjustment through closing. We anticipate the price at closing will be approximately R$4.2 billion BRL, which is approximately $1.05 billion USD1. FleetCor will finance the acquisition using a combination of existing cash and borrowings under FleetCor’s existing credit facility. The Company expects the acquisition to close in the third quarter of 2016, subject to regulatory approval and the satisfaction of customary closing conditions. “We expect the acquisition to be accretive to earnings in 2016, in the range of $0.10 – 0.13 USD depending on timing of close. While our financial leverage will increase, we expect to de-lever quickly from the combined cash flow of the businesses,” said Eric Dey, chief financial officer of FleetCor Technologies, Inc. “Following the completion of the acquisition, we will have sufficient liquidity for future corporate development as well as share repurchases.”

The acquisition of STP will provide: Immediate cash EPS accretion, with long term EPS growth potential Enhanced scale in Brazil to support our broader ambitions in workforce payments, an innovative, cardless fuel payments solution with FleetCor's global partner, Shell.

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